Analysts Split on New Hulu CEO's Priorities

Mike Hopkins

AP Images

Will Mike Hopkins invest in originals like Netflix and Amazon, or provide plumbing for networks' TV Everywhere efforts? Either way, its network owners would "like it to be big enough to suck the oxygen from others."

The video giant named a permanent CEO on Oct. 17 in Mike Hopkins, a Hulu board member who ran distribution for Fox Networks Group. But analysts disagree as to his intentions with Hulu, whose rocky six-year history includes former CEO Jason Kilar butting heads with owners Disney, Fox and NBCUniversal and scrapped plans to go public or sell.

Analyst Richard Greenfield says Hopkins might want to wade more into original programming as Netflix and Amazon have done. "He knows the importance of it from his days at Fox negotiating carriage deals," says Greenfield.

David Bank of RBC Capital Markets says Hulu could help traditional networks popularize TV Everywhere initiatives. "They should let other players opt in to the Hulu plumbing for authentication," says Bank. "Hopkins is well-respected by all sides of the affiliate fee world and he understands the plumbing. He is a really unique player."

Hulu generated $695 million in 2012, mostly from ads, a category that PricewaterhouseCoopers predicts will more than double by 2017 to $6.6 billion in North America, not counting mobile. Hulu's quest for a big piece of that market may have to be balanced with the wish of its parents that Hulu not pose a risk to their traditional TV business, says analyst Tony Wible of Janney Montgomery Scott.

"There are clear conflicts of interest at Hulu, and its structure may limit its full potential," he says.

That potential is enormous. At the end of April the company boasted 4 million subscribers who pay $8 a month for the Hulu Plus premium service, and about 30 million more head to the website each month to watch TV shows for free with advertising. Also, a new study from PwC indicates that 66 percent of American consumers access at least some TV content online, and Hulu is the third-most-popular spot to do so, following Netflix and the websites of the TV networks themselves.

Brian Wieser of Pivotal Research Group says that one theory of Hulu holds that the parent companies -- having given up on an outright sale of the asset -- might simply want to leverage it to keep a check on rivals.

"They'd like it to be big enough to suck the oxygen from others. They may just want to own the most Hulu-like thing out there," Wieser quips.